Investment capital in Hong Kong moving offshore

Investors driven away by city’s strict property curbs.

Real estate advisor Colliers International said more investment capital originating from Hong Kong turned to offshore markets such as China and Japan, where inbound purchases doubled over the past six months.

It noted that the Asia-Pacific region is entering an era of slower growth and faces challenges such as the potential risk of liquidity outflow from Asia.

Colliers pointed out that Beijing and Shanghai saw a rebound in en bloc sales transaction activity during the second quarter, which was driven by a number of significant deals from domestic and foreign institutions.

In contrast, the office leasing market in most key cities in Asia Pacific did not experience significant growth, said Colliers.

Colliers expects office rents in the region to increase over the next 12 months but the pace of rental growth will taper off.

On the sales front, investment transaction volume is likely to consolidate further in the second half of 2013 as risk-averse investors continue to be cautious with concerns of rising interest rates that will lead to higher property yields and reduced property values.